Hyatt Hotels Corp (H) 2025 Q4 法說會逐字稿

Good morning, and welcome to the Hyatt fourth-quarter and full-year 2025 earnings call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to Adam Roman, Senior Vice President, Investor Relations and Global FP&A. Thank you. Please go ahead.

Thank you, and welcome to Hyatt's fourth-quarter 2025 earnings conference call. Joining me on today's call are Mark Hoplamazian, Hyatt's President and Chief Executive Officer; and Joan Bottarini, Hyatt's Chief Financial Officer. Before we start, I would like to remind everyone that our comments today will include forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties as described in our annual report on Form 10-K, quarterly reports on Form 10-Q and other SEC filings. These risks could cause our actual results to be materially different from those expressed in or implied by our comments.

Forward-looking statements in the earnings release that we issued today, along with the comments on this call, are made only as of today, and will not be updated as actual events unfold. In addition, you can find a reconciliation of non-GAAP financial measures referred to in today's remarks under the financial section of our investor relations website and in this morning's earnings release. An archive of this call will be available on our website for 90 days. Additionally, we posted an investor presentation on our investor relations website this morning containing supplemental information.

Please note that unless otherwise stated, references to occupancy, average daily rate, and RevPAR reflect comparable system-wide hotels on a constant currency basis in closed hotels in Jamaica, are excluded from comparable metrics in 2026. Percentage changes disclosed during the call are on a year-over-year basis, unless otherwise noted. With that, I will now turn the call over to Mark.

Thank you, Adam. Good morning, everyone, and thank you for joining us today. I want to begin by expressing my sincere gratitude for and pride in the entire Hyatt family. Our teams around the world navigated a dynamic macroeconomic environment in 2025, guided by our purpose. We advanced our evolution to a more brand-focused organization, one that uses sharper brand positioning and deeper insights to go to market in a more meaningful and differentiated way. This approach allows us to serve our guests and customers on more stay occasions and become an even more attractive brand choice for owners. We closed 2025 with momentum and we believe we are better positioned than ever to create lasting value for our shareholders.

Now turning to operating results. This morning, we reported fourth quarter system-wide RevPAR growth of 4% and driven by the continued strength of our luxury brands. Leisure transient RevPAR increased approximately 6% to last year as our guests continue to prioritize leisure travel. This was especially true across our luxury brands, where we saw leisure transient RevPAR grow by 9%, with strong growth across the world. Business transient RevPAR declined 1% in the fourth quarter, driven by select service hotels in the United States, while full-service hotels delivered low single-digit growth led by hotels in international markets. Group RevPAR increased 3% compared to last year, in line with our expectations and supported by a more favorable calendar in the United States.

We continue to see exceptional engagement from our World of Hyatt loyalty members a key driver of our commercial performance. The role with Hyatt program is consistently recognized in the industry as best in class, and we are proud to have been recently recognized as NerdWallet's best hotel rewards program and at the [Point guys] best hotel elite status in the industry.

World of Hyatt continues to grow in both scale and significance. We ended 2025 with over 63 million members, an increase of 19% compared to the end of 2024 and World of Hyatt members accounted for nearly half of total occupied hotel rooms across the world in 2025. And as we've sharpened our brand focus, we're seeing loyalty drive not just scale, but higher-value demand, particularly among our most frequent and loyal guests. In 2025, we saw a 13% increase in room nights from members who stayed with us for 50 or more nights over the course of the year.

It's clear that the value proposition of our loyalty program resonates with current and prospective members, which we believe makes Hyatt very attractive to hotel owners and developers as they look to brands that are growing in value to them.

Turning to development. We achieved industry-leading growth for the ninth consecutive year with net rooms growth of 7.3% in 2025, excluding acquisitions, net rooms growth was 6.7%, a meaningful acceleration from 2024. During the fourth quarter, we surpassed 1,500 open hotels and resorts globally and welcomed several notable openings, including the [Park Hyatt Cabo de Sol and Andes One Bangkok], our newest upper mid-scale brands are starting to make an impact marked by the second (inaudible) hotel opening, along with the debut of our first I select hotels.

Both brands provide the foundation for our upper mid-scale expansion in the United States. We also welcomed several unscripted by Hyatt hotels during the quarter, and we're excited about the opportunity to grow this brand across the world. We ended 2025 with a record development pipeline of approximately 148,000 rooms, up more than 7% compared to the end of 2024.

In the United States, we achieved the strongest year of signings in the past five years with 50% of those signings in markets where Hyatt does not currently have a brand presence. Our three new brands, unscripted by Hyatt, Hyatt Studios, and Hyatt Select accounted for nearly two-thirds of the signings in the United States, demonstrating the compelling value proposition for owners and developers and the clear opportunity for Hyatt to expand into new markets. Outside the United States, we continue to see strong interest in our brands, and we expect Greater China and India to be significant drivers of future growth.

In Greater China, we are seeing strong interest across our select service brands, with signings growing by more than 50% compared to 2024. In India, we are seeing great interest in our full-service offerings. Our strong pipeline and momentum in upscale and upper mid-scale brands reinforce our confidence in achieving durable and capital-efficient fee growth well into the future.

Now shifting to an update on transactions. On December 30, we sold the remaining 14 hotels in the Playa portfolio to Tortuga Resorts for approximately $2 billion and entered into long-term management agreements for 13 of those properties. This transaction strengthens our position as the global leader in luxury all-inclusive offerings and is another example of delivering on our commitments and emerging with a value-accretive asset-light platform.

During the quarter, we also completed the sale of 3 [Alua] properties in Spain, which we acquired in late 2024. As part of this transaction, we entered into long-term management agreements and the new owner plans to invest additional capital into those properties. We continue to make progress on the sale of additional owned properties and we currently have three hotels under purchase and sale agreements.

We expect to close these transactions in the second quarter of 2026, subject to certain closing conditions, and we will provide further updates as these transactions progress. We are also evaluating opportunities to sell additional assets beyond those assets already under contract. Since announcing our first asset sell-down commitment in 2017, we have realized over $5.7 billion of real estate disposition proceeds at an average multiple of 15 times. And we've invested approximately $4.4 billion into asset-light platforms at a blended multiple of less than 10 times.

We've returned $4.8 billion to shareholders over this period of time, proving that we can return significant capital to shareholders while also investing in growth that creates long-term value. We are now fully transformed into an asset-light business, and we expect asset-light earnings of 90% and in 2026. As I reflect on the year, I'm incredibly proud of what we've accomplished.

We achieved strong operating results and organic growth, advanced our brand-focused organization, and completed the Playa transaction in a fully asset-light manner. But what stands out most to me is how our purpose has remained our North Star. While Hyatt has evolved significantly over the past decade, expanding our portfolio, entering new markets and transforming our business model, what has never changed is the foundation that drives our decisions and defines our culture.

Our purpose is embedded in the way our colleagues care for each other, our guests and our owners every day around the world. It's what enables us to meet people where they are to lead with empathy and to deliver differentiated experiences. Our purpose shapes how we invest in our brands and loyalty program, where we choose to grow and how we allocate capital. We've been deliberate about investing in the parts of our portfolio where we see the strongest demand, the best owner economics and the greatest returns. That discipline has strengthened the durability of our fee-based earnings and increased our scale over time.

As we look ahead, we believe this positions Hyatt as the most responsive, innovative, and ultimately, as the best-performing hospitality company, one that can continue delivering consistent performance, capital-efficient growth and long-term value for our shareholders.

I would like to close by thanking each of our colleagues around the world who bring our purpose to life and deliver value to our stakeholders every day. Joan will now provide more details on our operating results. Joan, over to you.

Thanks, Mark, and good morning, everyone. In the fourth quarter, RevPAR exceeded our expectations, increasing 4% compared to last year. As Mark noted and consistent with the trends we have seen throughout the year, high-end chain scales produced the highest growth. In the United States, RevPAR increased 0.5% compared to last year. Full-service RevPAR increased 2%, benefiting from a more favorable calendar while RevPAR declined for select service hotels reflecting softer business transient demand.

Outside the United States, RevPAR performance remained strong, led by leisure transient travel. Asia Pacific, excluding Greater China, led all regions with RevPAR growth of more than 13%, fueled by international inbound travel. Greater China had the strongest quarter of RevPAR growth for the year with domestic travel up in the mid-single digits, a positive shift compared to trends we saw earlier in 2025.

Europe continued to deliver great results supported by high-end leisure demand. Our all-inclusive resorts finished an exceptional year, growing net package RevPAR 8.3% compared to the fourth quarter of 2024 with excellent performance in both the Americas and Europe. Our results reflect sustained trends seen throughout 2025, outperformance in luxury and full-service brands, strength in international markets and growing demand for premium all-inclusive experiences.

Turning to our financial results. Gross fees in the fourth quarter increased approximately 5% compared to the same period last year to $307 million. Gross fees for the full year increased 9%, finishing at $1.198 billion. Our fee business has become the engine behind Hyatt's earnings model and this is especially true when it comes to organic fee growth.

From 2017 through 2025, organic growth fees have grown by almost 8% on a compounded annual basis demonstrating the strength of our underlying core-free business. In the fourth quarter, owned and leased segment adjusted EBITDA declined by approximately 2% adjusted for both asset sales and the Playa transaction, while Distribution segment adjusted EBITDA declined versus the prior year due to Hurricane Melissa and lower booking volumes from 4-star below hotels.

Fourth-quarter adjusted EBITDA growth was solid. Despite headwinds from Hurricane Melissa and on a full year basis, we achieved another strong year of adjusted EBITDA growth, increasing over 7% after adjusting for assets sold in 2024 and Playa owned hotel earnings. As of December 31, we had total liquidity of approximately $2.3 billion, including $1.5 billion of capacity on our revolving credit facility.

During the quarter, we repaid the notes due in 2026 and issued $400 million of notes due in 2035. We used proceeds from the Playa real estate sale transaction to fully repay the outstanding balance under our $1.7 billion delayed draw term loan in accordance with the terms of the agreement.

In the fourth quarter, we repurchased $114 million of Class A common stock and for the full year of 2025, returned approximately $350 million to shareholders through share repurchases and dividends. We ended the year with $678 million remaining under our share repurchase authorization. We remain committed to our investment-grade profile and our balance sheet is strong.

Before I cover our full year outlook for 2026 I'd like to highlight that beginning in the first quarter of 2026, we are updating our definition of adjusted EBITDA and will no longer include Hyatt's pro rata share of owned and leased adjusted EBITDA from unconsolidated joint ventures. We believe this change not only aligns our definition with our peers, it reflects our strategy and evolution of our business.

To help you with modeling our outlook for 2026, we've provided bridges from 2025 reported results to our 2026 outlook on pages 18 and 19 in the investor presentation published this morning. As we have turned the calendar to 2026, we're encouraged by full-year forward-looking trends. Group pace for full service hotels in the United States is up in the mid-single digits for this year and is expected to benefit from large-scale events such as the World Cup.

We continue to hear positive feedback from our group and corporate customers about their intent to travel this year, particularly for customer-facing travel. Pace for our all-inclusive resorts in the Americas, is up over 9% in the first quarter, reflecting the continued strength of leisure travel. We expect full-year system-wide RevPAR growth between 1% to 3%, and we anticipate trends in 2026 will be similar to 2025. This includes higher growth in international markets compared to the United States and luxury to be the strongest chain scale.

In the United States, we expect full year RevPAR growth between 1% and 2%, led by our full-service hotels. We expect net rooms growth of 6% to 7% continued momentum behind our new brands, driving another year of strong organic growth. Gross fees are expected to grow between 8% to 11% in the range of $1.25 billion to $1.335 billion. Our outlook reflects strong contribution from our core business and incremental fees from the Playa Hotels along with the impact of temporarily closed hotels in Jamaica and moderate FX headwinds from properties in Mexico.

Adjusted EBITDA is expected to grow at a very strong 13% to 18% and when adjusting for the removal of pro rata JV EBITDA and asset sales in the range of $1.155 billion to $1.205 billion. This reflects strong fee growth and a net positive benefit from the extended co-branded credit card terms. Our outlook assumes continued pressure in the Distribution segment which we expect will decline by approximately $10 million compared to 2025.

Adjusted free cash flow is expected to increase 20% to 30% and in the range of $580 million to $630 million, and reflects the conversion of adjusted EBITDA to adjusted free cash flow of at least 50%. Finally, we expect to return between $325 million and $375 million of capital to shareholders through share repurchases and dividends.

For the first quarter of 2026, we expect global RevPAR growth around the midpoint of our full-year range, with international markets growing at a higher rate than hotels in the United States. Gross fees could grow in the mid-single-digit range and adjusted EBITDA could grow in the low single-digit range compared to what we reported in 2025 after removing pro rata JV EBITDA.

As a reminder, we are lapping a very strong first quarter of 2025 expect approximately half of the impact from Hurricane Melissa to our fee business and distribution segment in the first quarter. To close, our 2025 results reflect the strength of our asset-light business model, the power of our brands and the disciplined execution of our strategy. As we look ahead, we expect our competitive advantage will continue to expand fueled by the attractiveness of our network and the opportunities to grow across geographies and chain scales. We enter 2026 with confidence supported by the best team in the business and a clear focus on driving meaningful value for our owners, guests, and shareholders.

This concludes our prepared remarks, and we're now happy to take your questions.

(Operator Instructions) Dan Politzer, JPMorgan.

Mark, I wanted to touch on the net unit growth at the 6% to 7% that you gave. I think it was last quarter, you talked about maybe being more glass half full here. I wanted to check if that's still the case. And then maybe you can talk about the drivers for this outlook, it's conversion, midscale. And then along with that, your appetite for larger partnership deals within this guidance.

Yeah, glass is still half full. I feel really good about the momentum that we've seen. We had a really significant signing quarter in the fourth quarter. We have tremendous momentum in the newly launched brands. So in Hyatt Select's case, for example, we went from having nine hotels to in the pipeline. And of those, we've got some new construction, by the way, in the Hyatt Select brands. Some are prototypical good construction, but most of them are conversions.

So we have three under construction, but we have 27 under design and many of those will be conversions. Studios went from five under construction to 10, but we also have 31 under design. And so they will advance and get shovels in the ground soon. And unscripted went from nothing to having open and in the pipeline. Right now, three under design, three under construction. So of the eight, six are quickly. And then (inaudible) we have 72 hotels opened by the end of the year and 93 in the pipeline.

So the entirety of the upper mid-scale side of the equation has tremendous positive momentum. And I'm particularly encouraged to see the advancement of so many projects through design into construction for studios. So that's one piece of the equation. The other piece of the equation is that our mix, as you know, is about 70% luxury and upper upscale have existing open hotels. It's also true that, that is the mix of our pipeline. -- is luxury and upper upscale. And 70% of the total pipeline is outside the US, where we're seeing less sensitivity to new builds. So we're opening new projects in China throughout Southeast Asia, in Europe and even in the Americas.

So we opened the Park Hyatt Los Cabos just this past quarter. And we will -- we have other openings in Mexico that are not -- are not the all-inclusive resort side of the business, but EP hotels coming this year. So I feel like there's great momentum and that the positioning that we've got, yes, financing is still difficult in the US Yes, construction costs have gone up. But frankly, that's already been taken into account a large measure. You might have seen some recent articles about housing starts actually lagging and housing construction actually lagging. And I think that might change. But right now, it takes a little bit of pressure off of construction materials costs, factor costs themselves. And we're working really hard to uncover other sources of financing to help our developers who are under design, get under construction.

So we've got so many levers that are all working right now in a positive manner that I feel really good about the overall growth profile organically looking forward. In terms of portfolio deals, which was your last question, yes, we continue to look at portfolio deals. We are very focused on making sure that they are real, meaning we really are not happy to just affiliate.

We want to have a deeper relationship and make sure that we are under contract in a way that is providing the owners the best value proposition, which is really to be plugged into our systems and under our franchise arrangement or under management arrangement. So we've got several discussions underway right now on portfolio transactions. Some are quite large, and they would be full-blown management or franchise agreements; others are smaller. We are still working hard to fill in Europe on the full service side as I keep -- it feels like refrain every quarter that I say it remains a focus of ours. But it's true. So sorry for the long answer, but I feel really good about where we stand.

Ben Chaiken, Mizuho.

Mark, at risk of getting too technical, for AI travel, how do you envision the ranking system working as consumers search for hotels to the extent you have a view, do you think this will be a traditional kind of like CPC auction model or traffic goes to the highest bidder? Or do you have a sense that order will be determined purely on the relevancy of the search? Obviously, it's early, but what will be your opinion on how this plays out.

It's interesting. I think the answer is, we'll see. I actually don't know yet. What I would say is we began last year building an intent-based search natively into our own digital channels. And we -- because we recognized early that guests actually wanted to search in a more with Pros as opposed to city, state and availability date metric or framework rather. But it's very much language-based. And that's been live on hyatt.com for some time. Secondly, we are early.

One of the very few hotel companies that's already launched an app live on Chat GPT. And we're learning a lot, just watching and learning from how people are actually using that app in relation to search. And so we're studying it. What I would say is that our architecture -- so a little bit of history, we've been at this at this being AI enablement for two full years.

We -- in the first quarter, starting January -- in January of 2024, I actually chaired the effort, but we put together a steering committee. We set up our infrastructure and built it -- when you set up governance, we set up our control environment, and we identified use cases, four of which have already been executed as large-scale agentive platforms. And we're moving forward on a number of different initiatives at the same time. With respect to search specifically, we've been working with open AI for months, which is why we've advanced to getting an app up and running with them. so quickly.

And of course, everybody in the world is at the table with Google and everything else isn't it. You can assume that every -- all suppliers are engaged with all providers of platforms, LLM based platforms. And I personally think that the natural language search capability is going to continue to grow in popularity. And we have seen -- we've got now longitudinal data over a couple of quarters which clearly demonstrate that the booking conversion rate, and the total revenue being generated through the native search capabilities, intent-based search capabilities that we built into hyatt.com, are having a positive impact.

So higher conversions, higher revenues per booking, longer length of stay. And so we're seeing the actual evolution of search, the way search is being done translate into value. And I believe that it's hard to extrapolate that to an app proposed within Chat GPT. Although if you go through and actually access that up, you'll see that there's a live link to hyatt.com so you can terminate your booking in hyatt.com because Chat GPT doesn't have any they've never indicated that they are prepared to be a merchant of record, and you can't terminate the -- or complete the reservation in that environment. But that's fine with us because it brings a sense into hyatt.com. So if I had to guess I would say there's a more than 50-50 chance that will be attribute-based and intent-based as opposed to strict value. I would also say that we are cognizant that both will have some place in the ecosystem, and we're prepared for both. I'm sorry for a long answer, but this is something that we've been working very intensively on for a long time, and I thought you'd benefit from a little bit more context than just the AI-based vehicles.

Shaun Kelley, Bank of America.

Mark, at risk of going even further down the rabbit hole, I think that AI and generative AI is clearly the topic across a lot of different sectors right now. So can you just talk a little bit more about your actual relationship with open AI or chat GPT, Kind of what do you get from that in terms of like ability to actually see behavior. What do you kind of own versus what do they own in that a little bit in that relationship? And then kind of what are you -- like how does it monetize or how is that different than what we might think of when we think of just traditional SEO based -- I start with kind of a very open browser-based search like how is this fundamentally different when you kind of see what people are actually doing on the app?

Yes. So trying to think about how to best order my answer. First of all, you're asking specifically about OpenAI. So let me just address that, but then let me actually expand that. Because OpenAI is just one of the LLMs that we're using for Agentic platforms. We've been licensed to others, Microsoft, Google, Anthropic, and open AI for use in different agentic platforms that we've already built in that are a lot -- they're in production at the moment they're live. And so the way it basically works is I'll keep it super simple, but the infrastructure that we've built is all private cloud based.

So what you end up doing is in-licensing an LLM and that LLM then is in your environment. and you're paying a license fee to whomever provided it, but that's the LLM that is used that we then apply our own training to. We train that model to be ours, and it remains ours within our environment in a protected way. And the reason why you use different LLM is because different LOMs have different attributes, both in terms of how they've been trained, but also their trainability. And so we've got, for example, a agent platform for our group sales force. And it's allowed them to value every piece of business. So a couple of years ago, I think I may have mentioned this on a prior call, we responded to over 1.5 million RFPs. And we wanted to actually automate a lot of what we're doing.

So now we have the ability to value every single piece of business that comes in, rank order them in terms of desirability from a total revenue perspective and a profitability flow-through perspective, but also it takes into account our overall relationship with the actual party that's requesting space for a meeting. So if it's a top five customer, but a relatively small meeting, it gets prioritized because we want to maintain greater share with the biggest and most important customers to us.

What that's allowed is for us to -- we've grown group market share every month since we launched this. we are realizing higher revenue per group booking. And we picked up almost 20% productivity for the group sales force folks at hotel level. So that's like a day a week, if you can imagine how significant that is. So that's just one of several examples. I'm not going to go through all of them. Among other things, there's some competitively sensitive ones that I'm not interested in sharing.

But with respect to the app, I think what's going to end up happening is you'll have several agentic interfaces. Yes, we have fully thought through agent-to-agent booking where you end up with individuals, individual travelers or even corporate travel managers or meeting planners that have their own agents and being able to have agents on our side that interface and can complete reservations without any intervention whatsoever. So we are prepared for that.

We already built the capability to do it, and that's what we're advancing at this point. So what I would say to you is we are agnostic. We're not agnostic. We care about which LOMs we use. We're deliberate about it, is what I should have said, not agnostic. But we are going to work with everybody. And I think the advancements have yet to come.

We're just seeing the beginnings of this on the agentic side, and Google is probably the one that has is continuing to really focus their time and attention on this, and they have yet to really sort of disclose the full suite of options that they will have. So we're paying close attention to that. But of course, we're in discussions with them every day. And all of what I just described as revenue focus. We've also implemented some genetic platforms that are very much efficiency focused and both are in play right now for us. So again, sorry for the long answer, but that's where we are.

And maybe just as a very short follow-up, but just because it's something we get all the time across again, lots of companies and industries. But obviously, you are -- you have a very strong G&A program this year to keep costs under control. Is some of the efficiency gains that you're seeing here directly related to some of these AI initiatives? I mean the group sales force comment that you made does seem really tangible. So are we seeing that directly? Or is that a little aggressive to connect those two dots?

No, it's not aggressive. There are -- some of the things that you're seeing in G&A are enabled by automation. And we've already deployed a number of things that allow us to do better. It's not just about saving costs, by the way. It's about elevating the quality, robustness and fidelity of the data and the analytics and the insights that we can derive from the data. So it's actually being better, not just being more efficient. Secondly, there is a whole bunch of things -- there are a whole bunch of things that we have already realized through automation, mostly machine learning applications as opposed to true genetic AI.

Although some through genetic AI to in our call center operations, for example, which have already had a significant impact in our cost structures with respect to our hotel services, which do not show up in our G&A. So we've got hundreds of millions of dollars of money that we spend every year supporting our hotels. And we have freed up capacity within funds to be able to invest further in AI enablement, automation and machine learning, and that's exactly what we're doing. So you're not going to see that in G&A. But it is a significant unlock for additional value creation within our chain services environment.

Richard Clarke, Bernstein.

And apologies for bringing a bit more back to the Brazil. But I guess, back in 2024, you were able to guide to a 54% conversion of EBITDA into free cash flow and then conversion of free cash flow into capital return. So those are worth for '26 than they were for '24 despite you being more asset light. So just help us bridge why that has dropped down. And I guess also the disconnect seems to be on RevPAR between your commentary of sort of mid-single-digit growth positive on all segments and a sort of low to midpoint of 1% to 2%. Is there anything in there like refurbishments that are going to weigh on RevPAR to get you down to that level?

So Richard, let me take these one at a time. The cash flow commentary that you provided, we expect in 2026 to be back to those levels of conversions, which is low to mid-50s%, you look at the percentages that I described in my prepared remarks. So we are absolutely back there. We also have opportunity above and beyond that. We are looking to have some delevering over the next couple of years to get us back into our investment-grade ratios. So that will take some interest expense out of the equation, and obviously, opportunity because of our asset-light position now and where we expect to grow, including the contribution from the credit card into -- of course, into 2026 and into 2027.

And as we previously described. So on the RevPAR, switching to that topic, we provided a bridge so that you could see very clearly how we anticipate RevPAR to grow the top line expectations that we provided in the outlook is 8% to 11%. And if you look at the contribution of Playa and the impact of the restructuring of the credit card earnings our core brand earnings into our results, we end up with a midpoint of core fee growth that is exceptionally strong. It's 7.5% at the midpoint.

1And we also provided in the materials that we distributed this morning that we have had a core growth in our fees over the period of time since 2017 on a compounded base almost at 8%. So we are exceptionally proud of how our core growth in fees is -- it has been growing, and we expect it will continue to grow. So we just wanted to make sure that highlight was well understood, which is why we provided the breakdowns that we have. And I hope that answers your question.

Maybe one final part. Just the capital returns of [$350] midpoint. So am I to understand that is because you will be deleveraging this year and so hence, some of the free cash flow goes to deleveraging rather than capital return.

As we sit here at this point in the year, our capital allocation strategy has not changed. We expect to invest in growth for the platform and return excess cash to shareholders as appropriate. And of course, retain our investment-grade profile. So as we sit here now, we think that's a healthy start to the year. And as you've seen us do time and again, we have -- and for the past decade, return capital to shareholders when there is excess cash. I would just point to when we had the signing bonus in the fourth quarter of 2025, we did what we said we were going to do, which is return that directly to shareholders as excess cash. So that will be how we proceed with this year as well.

Brandt Montour, Barclays.

So the industry has largely cited a better December than expected and that was the best month of the quarter, I think for most folks. You guys had a really impressive 4% globally for the fourth quarter overall. And then if I look at the first quarter guidance, you're pointing to the midpoint of your full year guidance. And so you're looking for, let's say, 2% in the first quarter after doing 4% in the fourth quarter.

So I guess the question is with the context that one of your larger peers yesterday called out a sort of a real-time firming or sort of inflection or something within business transient, which I know is a smaller segment for you guys -- they're seeing some first quarter pick up, essentially December and the first quarter. So just the question would be, are you seeing that? And then is there anything else in the first quarter that we should think about quarter-over-quarter in terms of comparisons?

So Brandt, why we ended up at that sort of middle point of the range is that we're seeing a continuation of trends. We're absolutely seeing net package RevPAR very strong in the first quarter. So leisure transient is as we described and actually, January has come in a little bit better than our range at the top end of our range. And with respect to the breakdown of that, BT has improved slightly, still a little bit flat in January. So it's been an interesting comparison because, of course, last year, we had the inauguration and so as we look at the quarter and we consider the conversations that we're having with our big customers, we're absolutely hearing that they are still intending to travel. It's just as you look at the booking windows, BT remains the shortest. So we're about flattish in January. The overall for January is at the high end of our range. And that package RevPAR is really strong, which is a great sign for leisure.

There are two things that I would say are true. (inaudible) Don't forget, we are lapping inauguration last year. So that actually has some impact. So excluding Washington, our US BT would have been better than -- because USBT overall was down. but it would have been better by a significant measure because of the comparison in DC. The second thing I would say is that our pace such as it is, it's short term is positive in both February and March, even though the total revenues that are booked right now are not huge proportions of total BT expected revenues, but they're up in both cases, above the top end of our RevPAR range for the year.

So BT looks like it's going to be firming for the remainder of the first quarter. Leisure as Joan pointed out, is very strong, especially our exclusive resorts with pace up around 10%. And so we're looking at a situation where as much as we can tell at this point, it looks like we've got more positive momentum on the BT front in the near term at least, anything beyond two months out is really relevant because the booking window is so short. We're also going to be heading into Liberation Day lapping liberation day that is. So we'll see what impact that's got in terms of the comparisons when we hit April.

Smedes Rose, Citi.

I just wanted to ask a little more on your decision to no longer include EBITDA from nonconsolidated joint ventures in your definition. I know you said part of it aligns with peers, but it also, I think you said reflects strategy and evolution. I'm just wondering, is this -- I assume these are -- because they're nonconsolidated, these are minority interests that you hold. Would it make strategic sense to kind of go to your partners and sort of try to get bought out over time as a way to kind of maybe get more simplicity in your overall model? And I guess the benefit of these JVs or nonconsolidated JVs will just come to you through the EPS line, which I think most people focus less on you guys relative to peers just because there's lots of reasons, it's very difficult to model versus just getting to an EBITDA number. So I'm just wondering if you could just maybe talk about that the decision there a little more.

Yes, a good question is one for which I have an answer, a great question is one in which I get an idea of throwing me that we're actually already implementing. So thank you. I would say in 2017, when we started going down the path of the program to sell down more methodically the asset base. We concurrently really shifted our strategy because up until then, we were actively using real capital like we had allocated $200 million back to fund JV interest to help PROPEL getting high centric in great locations with great partners. And those investments turned out to be good investments. Much -- many of them other than a couple have already been monetized.

And the same was true for a few high places in key locations like Austin, Nashville, et cetera. And so we have used capital through JVs to help propel and accelerate growth for individual brands. What I'll tell you is we are not I believe that we will find other opportunities to do that, but it is not a proactive strategy that we are pursuing. We are actually pursuing what you described, which is looking at monetization of all of our JVs over time. As you say, in some cases, we are -- we have the ability to actually control an exit. In other cases, we have bought out partners so that we can control the hotel and then be able to pursue a sale. There are several examples of that where those owned hotels are currently in our portfolio.

JV partners have been bought out. And then finally, we've got one public situation, which is Juniper. I think our market cap of our holdings is somewhere the $240 million to $250 million range, which is a staggering return because we only put in maybe $40 million into that investment to begin with. But I think over time -- and that's after a significant decline in the Indian market. So we believe that value will recover because performance in India continues to go from strength to strength, and we will look to monetize that over time. So your suggestion is accepted, and the mandates set, and we're going to be going to work.

And I would just add that similar to the program for any asset sales, we have retained management and franchise contracts on every single transaction. And this portfolio is also of a very high quality and we have high-quality partners. So as we consider all of the future actions we might take that Mark laid out, we would retain management and franchise contracts on all of these.

That's helpful. Can I just ask just a quick follow-up separately. You mentioned the impact of Hurricane Melissa it's in your numbers. You haven't -- I mean do you have any business interruption insurance claims? Or is there anything that might offset that?

Yes, we sure do, Smedes. And we have -- as you can imagine, in this part of the world, this is a risk that we're faced with owners, while we were owning the Playa Hotels and our owners also have good insurance in this location. So we have not included that in the outlook that was your next question. We're not sure when those proceeds will come in, but we'll keep you posted.

Okay. But that impact could be modified somewhat by -- I know the timing is always difficult in the announced is difficult, but -- it will be either.

It will be. The amount and timing is what is still under discussion.

Steve Pizzella, Deutsche Bank.

Mark, I wanted to ask about how you think about the ALG vacations benefit to the business today? And whether that's something you would consider selling out right or to a partner similar to UBC where you can manage the business. I guess just more curious broadly about how you think about the benefits to the broader business. Is it an acquisition tool for new oil and cruise resorts because you can tell owners you'll drive people to your destination? Or is it just that integral to the existing portfolio, you like maintaining the control?

The answer is yes and yes. So let me give you some data. First, we -- the HIT portfolio has outperformed the overall market. every year since we've owned ALG. And part of the reason that's true is because of ALGV's capabilities. I think that plus UV members who are the most dedicated and loyal are driving outperformance for our HIC hotels. And finally, World of Hyatt is growing significantly across our all-inclusive resort in terms of penetration. We believe I think it's up 290 basis points year-over-year in terms of penetration. And I think we have a lot more room to go.

So I think that over time, you'll see World of Hyatt also be a major contributor. So between those three avenues, which are wholly owned, we have real ability to drive business where and when we need it. And the underlying business itself is actually a profitable and really good distribution platform. For context, HIC represented about 30% of ALGV's total hotel revenue in '25. And ALG represented about 16% of HICs total rooms revenue in 2025. So just to give you a sense of proportionality, that's the -- so it's a channel that represents fully 16% of our total volume rep rooms -- sorry, net package revenue volume. And we -- our own portfolio represents about 30% of ALG's total volume.

So the answer is yes, it is extremely helpful in new property acquisition. Yes, it is extremely helpful and vertically integrated into how we sell currently. And I would say the other major benefit is that we get tremendous visibility, tremendous visibility into Lyft. We represent something like 13% of all the platelets in Cancun Airport. The largest market share of anybody, and we are similarly number one in (inaudible) So we've got an incredible relationship. We buy hundreds of millions of dollars of airline tickets every year from all the major airlines. And so we are plugged in, in a way that gives us great, great visibility route planning and to flow.

So your question. Yes, my answer is we are always open and always evaluating potential strategic alternatives for ALGV, but there are certain conditions. One, we have to maintain it -- we have to maintain the strategic attributes that I just described, too. It really needs to be something that would be an enhancement of their business model not just the financial transaction because there are many players you can imagine that would bring different dimensions to ALGV's business, whether that be geographic expansion or product type expansion. And finally, ALGV has, for the last two straight years, been working on AI enablement. And we believe that they've made some great advances, and we have a lot more to do this year. But I think we're going to end up seeing some real opportunities there to improve the internal economics of the business itself but also improve the market positioning of ALGV. So there's more -- I look at it and say there's opportunity to actually do better with what we have. And yes, we are open to strategic alternatives meeting those conditions that I just mentioned.

And maybe, Steve, I'll just add with respect to the guidance that I provided in my prepared remarks, I mentioned that there'd be about a $10 million headwind for 2026 related to the business, and that is in part because of the impact of Jamaica and in part because of what we're experiencing with the 4-star and below demand. So just to give you a little bit of color, in addition to what -- to that $10 million for the year, we expect on a net basis, that full amount to be recognized in the first quarter because we are lapping such a strong quarter relative to 2025. And so as you look at the rest of the year, we sort of moderated post liberation day. So Q2, Q3, maybe a little bit down but -- and an upside in Q4. So that's kind of how you can think about it across the year, which we think will be helpful because I think there's been some questions about how to model the business.

Yes. And if I could just -- look, we're not running the company for the first quarter of this year. This Jamaica impact is a '26 issue period. We have plans with the owner Tortuga and the other owners in Jamaica, it's primarily Tortuga. They've got a great fantastic insurance program as we had they will have the money. I've met with the Minister of Tourism 2 weeks ago in Spain, and they have assured and we know that airports are open, roads are open, the water supply -- potable water supplies restored, the grid is restored. They did this in record time, just remarkable. In addition to that, the government is taking action to facilitate getting building products brought in without undue tariffs and taxes and labor.

So they are really supporting -- the government is backing up the truck to make sure that all of the reconstruction can be done in the most efficient and fastest way possible, most efficient, most cost efficient and fastest way possible. So what I believe, yes, we're going to take a hit in 2026. We've already been very explicit about what that is. But I think the real point is what does that position us for, for 2027. We're going to have fully refreshed freshly newly rebuilt and renovated and upgraded hotels in Jamaica, which is going to have a very strong year because the government is going to make sure it does. There are too many jobs that are dependent on this industry for the government not to throw everything they have in the kitchen sink of this for 2027. So I believe that, yes, 26% is what it is.

And it's not it's not a persistent issue. It's not a fundamental structural issue. It's a point in time. 2027 has the opportunity for us to far exceed what our own underwriting was out of those resorts when we did the deal and so -- and when we sold the properties. So I look at it and say, I'm excited about the prospects for Jamaica. I'm excited about financial prospects for those properties as we head into 2027. And if you're here to buy the stock for what we're going to do in the first quarter, you probably shouldn't -- my view is you're -- that don't -- that's a trading question, and I'm not going to engage in trading questions. I would say this is about an investment where the profile sets up beautifully for a great 2027.

Lizzie Dove, Goldman Sachs.

I wanted to go back to rooms growth. You mentioned, I think it was Dan's question earlier about being open to portfolio deals. -- to confirm, is your assumption then that, that 6% to 7% wouldn't necessarily be all organic? And then you also mentioned some of the newer brands where you've got traction, Hyatt Select, unscripted, et cetera. Curious how you -- how big do you think those can be over time as a contributor?

We believe that the 6% to 7% is the organic growth number just to be clear. The fact that we have brands that are designed for conversion is taken into account. So portfolio deals are different, though. So when we're building Hyatt Select pipeline, which has expanded dramatically and when we're building the unscripted pipeline that's sort of one by each hotel. Sometimes we do so many portfolios. So we brought Wink hotels in Vietnam, six hotels that joined unscripted and December, that's a mini portfolio deal, but it's really treated like a regular way development deal. So our organic growth includes the brand portfolio that we currently have, which includes conversion brands.

So I would say you can expect that, that is how we think about that. The portfolio deals that I'm talking about are larger and have more infrastructure associated with them. These are management platforms, either because of geography or type of hotel where we would do a deal bring on a larger number of hotels either under its own brand or to be included under one of our collection brands or to be rebranded, and we would also bring on capabilities and people who are engaged if it's in a geography in which we have relative modest representation, which is exactly the kind of deals we should be doing because in order to grow our reach and our points of service to all of our guests and how we care for our guests, we end up focusing on the places where we don't have representation.

And I think one of the two of us, Joan or I talked about the fact that 50% of the either pipeline or openings were in markets where new markets. So that just goes to show that the strategy shows up in the data as well. So thank you for that, Lizzie. I want to thank all of you for your time this morning. As you've heard, I think, throughout today's call, we're really proud of what we've accomplished. We're really proud of the Hyatt family, and we're really excited about the momentum that we have in the business.

The fee-based aspect of our business is going from strength to strength. I think there's only been 1 year in the past 10 years where we have not led the industry in RevPAR growth. I would just focus everyone's attention on the fact that, yes, we've done a lot of M&A over this period of time, yes, we have looked at -- there have been -- as the headlines have continued to point out, there are some moving pieces. And my answer is we have been very explicit about what they are. Everyone knew what they were going to be because we've been very explicit. We provided bridges.

We provided all the information to simplify so that people can understand what we've done and where we're headed, but do not mistake that significant value growth through inorganic activity don't let that distract you from the fact that the core business is extremely strong. And our cash flow conversions are going up our returns to shareholders will continue to go up and our ability to delever and open up more capacity in the future or relever and return more to shareholders is before us. So stay tuned. We appreciate your continued interest in Hyatt. And we certainly look forward to welcoming you into our hotels and for any of you -- and I'm sure there's nobody in this category who are not members of the World of Hyatt, please join. It's a phenomenal program, and you can read about it on any blog. People love this program. So I don't take my word for it, just go redevelop. Thank you, and have a great day ahead.

This concludes today's conference call. Thank you for participating, and have a wonderful day. You may all disconnect.